According to CNBC.com, the British Bankers’ Association reported that UK mortgage approvals picked up in January from near record low numbers.

More specifically, mortgage approvals in the UK rose from 42,343 in December 2007 to 44, 288 in January of this year. The net mortgage lending also rose from 4.9 billion Pounds in December of 2007 to 5.2 billion Pounds in January.

In the article, the Bank of England policymaker, Kate Barker, further made the encouraging statement that a recession in the UK remains an unlikely prospect.

On the other hand, Alan Monks, an economist at JP Morgan commented, “With credit conditions likely to continue tightening, and the growing expectation that house prices will fall this year, we would still expect to see some further declines in house purchase activity looking forward.” However, he added, “But the rise in the BBA (British Bankers’ Association mortgage approvals) provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity.”

Mortgage approval rates are widely seen as a forward-looking indicator, and it was reported that the Pound rose in value when news of the approval rate increase was announced, reflecting an increase in confidence in the economy.

The Bank of England has reduced borrowing costs to 5.25% so far in 2008 and economists predict that the interest rates will be reduced further to 4.75% by the end of the year.